Apple Inc. on Tuesday revealed a smaller version of its hit iPad tablet computer that will start at $329 and comes with a 7.9 inch screen that’s about two-thirds the size of the full-size model.

Apple will start taking orders for the new model on Friday Oct. 26 and ship the Wi-Fi-only models on Nov. 2, said marketing chief Phil Schiller at an event in San Jose, Calif. Later, the company will add models capable of accessing “LTE” wireless data networks.

The iPad mini weighs 0.68 pounds, half as much as the full-size iPad, and is as thin as a pencil, Schiller said. The new device will come in both black and white with both color options sporting anodized aluminum back panels similar to the iPhone 5.

The screen resolution of Apple’s newest device is 1024 by 768 pixels, the same as the iPad 2 and a quarter of the resolution of the third-generation iPad. Also like the iPad 2, the new device will be powered by Apple’s A5 processor and like all iPads, will come in 16GB, 32GB, and 64GB storage sizes.

Essentially, the iPad mini is a 7.9 inch iPad 2.

Schiller doesn’t see it that way however, “it’s not just a shrunken down iPad, it’s an entirely new design,” he said.

Company watchers have for a year been expecting the company to release a smaller iPad to counter cheaper tablets like Amazon.com Inc.’s Kindle Fire HD. However, most were expecting it to cost between $250 and $300. At $329, it’s twice the price of the basic Kindle Fire.

The news of the higher-than-expected price point sent the company’s stock plunging, from $630 per share to $617 just minutes after the product announcement. The tech giant lost over $12 billion from it’s market cap.

In paying more, iPad mini buyers get more because the iPad mini’s screen is 7.9 inches compared to the Kindle Fire HD and Google Nexus 7’s seven-inch screens. Because the measurement is on the diagonal, however, the jump from 7 to 7.9 inches makes the iPad mini’s screen more than 35% bigger than it’s main rivals.

In a surprise, Apple also said it’s upgrading its full-size iPad tablet just six months after launching a new model, doubling the speed of the processor. Previously, the company has updated the iPad once a year.

The fourth-generation iPad will have a better camera and work on more “LTE” wireless data networks around the world. Apple is also replacing the 30-pin dock connector with the new, smaller “Lightning” connector introduced with the iPhone 5 a month ago.

The price of the new full-size model stays the same as the previous version, starting at $499 for a Wi-Fi-only version with 16 gigabytes of memory.